Morgan Stanley sees market returns tumbling over next 10 years

Morgan Stanley sees market returns tumbling over next 10 years
Weak economic growth and low inflation will limit investment gains.
NOV 04, 2019
By  Bloomberg
A weak environment for economic growth and inflation, paired with low bond yields, portends anemic returns from a typical stock-bond portfolio over the next decade, according to Morgan Stanley. A traditional fund — split 60% equities and 40% fixed income — will see an annual gain of just 2.8% over that time, about half the average over the last two decades, the firm's strategists estimate. That's based on the S&P 500 Index returning 4.9% per annum and 10-year Treasuries handing investors 2.1% a year for a dollar-denominated investor. [Recommended video: Ed Slott: Share these two planning ideas before 2019 ends] ​ Not only will the returns be below what investors are used to, but lower sovereign-bond yields will dampen the ability of fixed-income securities to offset large declines in equities, the Morgan strategists said. [More: Lower bond yields leave advisers pursuing controversial income strategy] "The return outlook over the next decade is sobering," according to strategists including Serena Tang and Andrew Sheets. "Investors face a lower and flatter frontier compared with prior decades, and especially compared to the 10 years post-[global financial crisis], when risk-asset prices were sustained by extraordinary monetary policies that are in the process of being unwound." The assessment comes with a caveat that in the past, low return expectations failed to materialize because central bank intervention pushed up asset prices. The analysts see the U.K. having the highest return potential for equities, followed by emerging-market shares. [More: Advisers scramble to help retirees navigate looming Fed rate cut]

Latest News

Married retirees could be in for an $18,100 Social Security cut by 2032, CRFB says
Married retirees could be in for an $18,100 Social Security cut by 2032, CRFB says

A new analysis finds long-running fiscal woes coupled with impacts from the One Big Beautiful Bill Act stand to erode the major pillar for retirement income planning.

SEC bars New Jersey advisor after $9.9M fraud against Gold Star families
SEC bars New Jersey advisor after $9.9M fraud against Gold Star families

Caz Craffy, whom the Department of Justice hit with a 12-year prison term last year for defrauding grieving military families, has been officially exiled from the securities agency.

Navigating the great wealth transfer: Are advisors ready for both waves?
Navigating the great wealth transfer: Are advisors ready for both waves?

After years or decades spent building deep relationships with clients, experienced advisors' attention and intention must turn toward their spouses, children, and future generations.

UBS Financial loses another investor lawsuit involving Tesla stock
UBS Financial loses another investor lawsuit involving Tesla stock

The customer’s UBS financial advisor allegedly mishandled an options strategy called a collar, according to the client’s attorney.

Trump's one big beautiful bill reshapes charitable giving for donors and advisors
Trump's one big beautiful bill reshapes charitable giving for donors and advisors

An expansion to a 2017 TCJA provision, a permanent increase to the standard deduction, and additional incentives for non-itemizers add new twists to the donate-or-wait decision.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.